Room Rates Across the Top 50 Hotel Marketsin the U.S. Will Increase by 3.7% in 2004; .Five Highest and Five Lowest Average Daily RoomRate Hotel Markets in 2005

Room Rates Keep Going Up, but Generally
Remain a Value

Atlanta,
GA – December 13, 2004 - After three years of declining hotel rates,
consumers are seeing a reversal of that trend and are beginning to experience
price increases for their lodging stay. In addition, rate increases are
beginning to escalate. Based on the recently updated Winter 2005 forecasts
of lodging industry performance prepared by Atlanta-based PKF Hospitality
Research ("PKF/HR") and Boston-based Torto Wheaton Research ("TWR"), room
rates across the Top 50 hotel markets in the U.S. will increase by 3.7
percent in 2004, followed by another 4.7 percent bump in 2005. Stronger
demand levels, combined with the increasing use of savvy price-setting
practices by both hotel chains and individual property managers, are making
hotel bargains harder to come by.

Outlook Varies Significantly Across Markets

"The anticipated room rate increases in New York City of 13.7 percent
in 2005 will lead the nation," noted R. Mark Woodworth, executive managing
director of PKF Hospitality Research. "Occupancy levels in New York City
have broken through the 80 percent barrier this year, thus making rooms
not only more expensive, but also harder to come by," noted John Fox, PKF
Consulting’s practice leader in New York. Based on data compiled by Smith
Travel Research, room rates for all chain-affiliated hotels in New York
City increased by approximately 10.2 percent through the first nine months
of 2004. By year-end, PKF/TWR forecasts hotel prices will end up 9.3 percent
above their 2003 level. New York City occupancies will reach 82.6 percent
this year and will climb to 84.0 percent in 2005.
.

Source: PKF Hospitality Research, Torto Wheaton Research

As illustrated in the chart above, four of the Top Five growth markets
for 2005 are coastal cities that function, to varying degrees, as financial
and economic hubs on a national and/or regional basis. The bright outlook
for Phoenix comes from a combination of strong business growth and continuing
strength in leisure travel. The chart below lists the five highest average
daily room rate hotel markets in 2005, based on the Winter 2005 Hotel Outlook
prepared by PKF/TWR. The average room rate in the top 50 markets will top
$100 for the first time since 2000.
.

Source: PKF Hospitality Research, Torto Wheaton Research

Flat Prices Remain in Certain Markets

Not all hotel operators will be able to increase their prices in 2005.
As indicated in the chart below, four of the nation’s Top 50 markets are
forecast to experience slight declines in average room rates. "In general,
we expect the interior markets to continue to recover at a slower pace
than the country as a whole," Woodworth noted. "Travelers to Houston, Kansas
City, Columbus, Long Island and Cleveland next year will see little change
in prices."

An imbalance between the available supply of hotel rooms in these markets
and the demand for these lodgings leaves the pricing power in the hands
of the customer in these markets. "It is interesting that the average occupancy
level in these five markets for 2005 (61.4 percent) is well below the occupancy
level forecast for the top 50 U.S. markets (66.6 percent)," Woodworth said.
.

Source: PKF Hospitality Research, Torto Wheaton Research

Where are the Bargains?

Not surprisingly, the nation’s more affordable hotels are generally
located in smaller markets. However, travelers can still find relative
bargains even in the bigger markets. "If you are flexible with your travel
plans, check with the hotel to find special seasonal, holiday, or daily
discounts," Woodworth recommends. "Hotels are more than happy to steer
you towards the gaps in their calendar when occupancy is a little light
and room rates are discounted."
.

Source: PKF Hospitality Research, Torto Wheaton Research

Who Benefits?

While rising room rates are worrisome news for travelers, it is glad
tidings for hotel owners and operators. "Hotels are most profitable when
room rates are able to grow above the pace of inflation," Woodworth said.
From 2000 to 2003, U.S. hotel room rates have declined 6.4 percent. This
has contributed to a 36 percent drop in hotel profits during the same period.
"Given the increases in room rates forecast for the next few years, we
are expecting hotel profitability to once again begin to rise," Woodworth
concludes.

PKF Hospitality Research (PKF/HR), headquartered in Atlanta, is the
research affiliate of PKF Consulting, the San Francisco-based consulting
and real estate firm specializing in the hospitality industry. PKF Consulting
has offices in New York, Boston, Philadelphia, Washington DC, Atlanta,
Indianapolis, Houston, Dallas, Los Angeles, and San Francisco. The
firm’s website is www.pkfc.com.

Boston-based Torto Wheaton Research is the premier provider of commercial
real estate forecasting, analysis and consulting services for office, industrial,
retail, multi-housing and hotel property types. The firm provides unrivaled
market knowledge through a full suite of research products and specializes
in commercial real estate risk management through strategic debt and equity
consulting. Torto Wheaton Research is on the web atwww.twr.com.